Cement price hike unsettles contractors, masses
The hike in the price of cement across the country has rattled builders, dealers, block manufacturers and workers in the building construction industry.
Bags of Cement
The hike in the price of cement across the country has rattled builders, dealers, block manufacturers and workers in the building construction industry.
It has also unsettled low-income earners, middle-class businessmen and civil servants who have plans to build houses.
While contractors handling government projects are seeking variation, some people interviewed said they had shelved their dreams of building houses for now.
A bag sells for N3,700 in Abuja, N4,500 in other places
Checks by Daily Trust shows that a bag of cement sells for N3,700 in Abuja and N4,500 in other parts of the country. This is even as the raw materials used in its production are available in the country.
Nigeria is said to be the largest manufacturer of cement in West Africa, and arguably in Africa, yet the price of this essential commodity in the construction and building industry has continued to rise, especially this year.
A recent market survey by Daily Trust in Abuja, Nasarawa, Kaduna and Niger states revealed that a 50kg bag of cement rose from N2,600 to N3,100 in late November, 2020.
Checks in other parts of the country showed that the price has further risen to between N3,700 and N4,500 across the country.
In Abuja, a cement dealer in Gwarinpa, Attah Peter, noted that the increase started before the #EndSARS protest, saying a bag of cement was N2,600 and sold by dealers at N2,800, but that later distributors increased the price to N3,500 and retailers sold it at N3,700.
Peter explained that, “Before, we could deposit money for 300 bags and get supply, but now you need money for 900 bags, and that is a full trailer. Also, the supply is always delayed; it can be up to a month before you get it.”
He further said the price of the commodity was affecting his business severely because it had become too expensive and that customers were complaining, adding that the few who were buying could only afford small quantities.
To corroborate this claim, another dealer, Moses Ifeanyi, said many customers had stopped coming.
Ifeanyi said, “We have so many challenges in this business. Before the increase, customers expected the price to go down due to the COVID-19 lockdown and other factors, but I was shocked when I was told of the increase when I went to restock. I believe the hike is from distributors.”
He further said he used to get customers who purchased 40 to 50 bags at a go, but that it had changed, expressing fear that the situation would put a strain on his purchasing capacity.
The manager of a block factory, Esther Emmanuel, said her company still ordered for cement, but that the price increase had affected the number of blocks she sold daily.
Ms. Emmanuel explained that, “A six-inch block was N160 and a nine-inch was N180, but now we sell at N200 and N220 respectively.”
Although her customers still patronise her, she said the sales volume had dwindled as those who used to buy over 20,000 blocks in a day had reduced the number to about 5,000 due to the hike in cement price and consequently the hike in the price of concrete blocks.
She further, “I still try to produce the same quantity as before even though I am not selling much. I have two block factories, but I stopped production in one of them, and this is affecting not only me but also some of my workers that have been asked to go.”
Product no longer affordable in Lagos
In Lagos, the price of cement per bag is between N4, 000 and N4,500.
Contractors and individuals said apart from cement, the prices of other building materials had gone up thereby making houses more expensive to build.
The Managing Director of Frontline Builders, Mr. Timothy Awoleye, in a chat with Daily Trust on Sunday, decried the development which he said could worsen the economic downturn in the country.
Mr. Awoleye explained that houses were becoming more expensive to build due to the high cost of materials; hence the cost of renting and buying houses would be higher and availability would drop.
He said the dry season was supposed to be a beehive of activities in the building industry, but that the volume of construction activities was low due to the prevailing situation.
Mr. Awoleye warned that this could spill over to 2021 thereby making things difficult for people, especially workers who only got money to sustain their families after they were hired for building projects.
He further said, “We are not seeing the volume expected because of the spike in the cost of construction materials. If you can’t work so much in the dry season because of the cost of materials, then you won’t be able to do much afterwards, and that is a big problem.”
Dangote selling at N3,550, BUA N3,650 in Kano
In Kano State, a bag of Dangote cement sold at N2,600 three months ago, but it is now N3,550, while a bag of BUA cement, initially sold at N2,650 and is now N3,650. Lafarge cement is out of stock in Kano for now.
A block producer, Alhaji Muntari, said the hike in cement price has forced many producers to suspend production.
It was gathered that a nine-inch block which was sold at N120 is now N170, while six-inch block which cost N110 is now N150.
Similarly, it was observed that most bricklayers and local contractors have been rendered jobless as many construction works have been suspended.
‘We have no option but to stop building’
Malam Ali Othman is a civil servant who is trying to complete a house he has been building in the last four years.
Othman said he was forced to put the project on hold as he could not afford cement at its present price.
He explained that, “I have been building this house for four years now and I have never experienced such a hike in the price of cement. I have halted every cement work in the house for now.”
In Ogun State, our correspondent gathered that a bag of cement, which was sold at N2, 650 (Dangote) and N2, 550 (Lafarge) about three months ago now costs N3,300 (Dangote) and N3,200 (Lafarge).
It was also gathered that a nine-inch block was sold at N160, while six-inch cost N140 three months ago, but following the rise in the price of cement, a block now goes for N220 (nine-inch), while six-inch is sold at N180.
A block producer in Abeokuta, Sarafa Olowe, told Daily Trust on Sunday that the increase in the price of cement had affected the cost of production, leading to the rise in the price of block.
Olowe said, “If the price of cement increases, definitely it has to affect the price of blocks. Example, anybody who has budgeted for 2,000 blocks at the rate of N200 but realises that the price has increased to N250 per one, certainly, the person may not be able to go ahead. This will also affect the intended project.”
In separate interviews with people who are building houses, they lamented the effects of the increase in the price of cement on their projects, with most of them describing the situation as a setback.
In the same vein, some residents of Bayelsa State have expressed worry over the sharp increase in the cement price of cement from N2,600 to N4,000 per bag in just a few months.
Findings by Daily Trust revealed that a bag of cement as at the first week of September, sold at N2,600 in the state, but now, it has drastically increased to N4,000 for all the cement products such as Dangote, BUA and Lafarge.
Also, the price of a six-inch block which was N130 has increased to N170, while nine inches which was N170 a few months ago has increased to N230.
A block producer, Mr. Talent Edafe, noted that the cement price increase had affected their work negatively as contracts were not forthcoming, saying his clients were complaining lack of money.
Mr. Edafe explained that, “In the past, we used to have several jobs in the dry season because many people would rush for their work, but now, nothing is coming.”
A bricklayer, Tamuno Kingsley, said since they did not have many jobs due to the hike in the prices of building materials there was no point increasing the cost of jobs.
According to him, they are still charging N4,000 for a daily job and N500 to mould blocks from a bag of cement.
In Bauchi State, the situation is the same. Three months ago, a bag of Dangote cement sold at N2,500 while Lafarge and BUA cost between N2,500 and N2,600, but the prices have now risen to N3,100.
A block producer along Gombe Road, Alhaji Umar Yusuf, told Daily Trust that the hike in the price of cement had paralysed activities in his industry.
Alhaji Yusuf said, “The current situation is threatening the block industry. Many people are no longer patronising us due to the hike in cement price. We have reduced the quantity we were producing so that we can maintain quality, but sales have drastically reduced.”
Hike stifling construction industry – Builders
Also speaking on the development, the President of the Nigerian Institute of Building (NIB), Kunle Awobodu, said the hike was not good because it was drastically affecting the construction industry.
Awobodu said, “You don’t know how to move forward. You are in the middle of executing a job where you have quoted N2,500 and then suddenly you have to buy at N4,500. No one envisaged that kind of increase, and clients don’t like discussing variations.”
He explained that the biggest worry of builders was that some contractors might be tempted to reduce the quantity of cement which could compromise quality.
He further said people had not worked for a long time due to the effects of COVID-19, and that just when the economy was beginning to open up, inflation set in.
When asked to situate the cause of the increase, Awobodu said, “Hike in cement price after a similar hike in fuel and electricity tariffs was expected. These people are in business and they have to survive.”
He revealed that some of the production facilities were undergoing maintenance and could not keep pace with demand, and so, forces of demand and supply set in.
He added that, “Our appeal to professionals on projects is to refuse the temptation to dilute quality. They should explore the option of contract variation or advise clients to suspend temporarily until the situation normalizes.”
Sabiu Shuni Gwammaja, a contractor, said they had resolved to seek for variation from authorities.
Gwmmaja said, “I have about four different projects in my hand to construct classrooms. I would have finished the projects if not for the hike in the price of cement. I am not the only one complaining, even major contractors handling federal government projects are complaining. Some of us are seeking a variation to complete the projects.”
Another contractor in Lagos, Innocent John, said there was the need for the Federal Government to intervene.
John said, “Most of the things required to produce cement are available here in Nigeria, and ordinarily, the product should be cheaper here.
“Honestly I suspect foul play somewhere because I remember that the Federal Government has given a waiver to some producers…Maybe exporting the commodity is a contributor to the hike.”
Price will come down – Manufacturers
Reacting to the hike in the price of cement, the Executive Secretary of the Cement Manufacturers Association of Nigeria (CMAN), James Salako, told Daily Trust that manufacturers did not increase the price.
Salako said, “You will recall that petroleum price has gone up, so I suspect that haulage costs have been playing some part.”
He said the distribution chain might also have a part in the current price and that the situation was exasperated by increasing demand for the product about this time of the year since the construction industry lost some time during the shutdown of the country.
He, however, said, “We think what is happening is transient; it will not last.”
Effort to reach the spokesperson of Dangote Cement, Anthony Chijena, was not successful.
Similarly, when contacted on Thursday on the reason for the spike in the cost of cement, the spokesman of BUA, Mr. Otega Ogra, asked one of our correspondents to send a mail, which he did, but as at the time of filing this report, he was yet to respond to our enquiry.